Mortgage Market Conditions and Borrower Outcomes : Evidence from the 2012 HMDA Data and Matched HMDA - Credit Record Data

This article describes mortgage lending activity in 2012 based on newly available data reported under the Home Mortgage Disclosure Act (HMDA). In addition, we present the results of a first look at a new data set composed of HMDA records matched to borrowers' credit records. Using the matched data, we compare borrowers' credit characteristics at loan origination, and subsequent payment performance, by various HMDA attributes such as income, minority status, and type of lender. Also, because the credit record data are longitudinal and follow individuals rather than just their mortgages, we are able to study long-term outcomes of mortgage borrowers beyond performance on their mortgage, such as whether credit scores recover after delinquency at a different pace for different demographic groups. We focus on loans made in 2006, which reflect lending activity at the height of the housing boom, and loans made in 2010, which reflect the subdued market conditions post crisis. Key findings include: (1) substantive differences in performance across racial and ethnic groups exist even after controlling for credit score, house price appreciation, and higher-priced loan status; (2) credit score recovery after mortgage delinquency, on average, is similar across racial and ethnic groups and takes over four years; and (3) loans originated in 2006 that are the focus of the Community Reinvestment Act (CRA) had a lower delinquency rate than the rate for all loans, inconsistent with the view that the CRA was a principal driver of the mortgage crisis